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Subject Topic: Governmental Accounting question-2 (Topic Closed Topic Closed) Post ReplyPost New Topic
  
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Jdot514
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Posted: 21 May 2009 at 11:46 | IP Logged  

As far as an all-inclusive formula, I know that Becker has a GALS BARE and GOES BARE mnemonic.  I think it’s easier to just think it through rather than trying to memorize those because it is all about practical application.  If you really understand the difference between modified and accrual, you should be able to think through this on your own after a few practices.  If not, perhaps you should take a step back and study modified accrual a little more so that you better understand how it differs from accrual.  With that being said, here’s my explanation.

 

Remember that this is the fund balance (aka Balance Sheet), not the changes in fund balance (aka Income Statement like above).

  

$48,200,000 à Original GRaSPP fund balance

+70,000,000 à The gov’t funds would have expensed these, not capitalized them, so we need to add them to our assets

-36,000,000 à Acc Depr is a contra-asset, so you subtract it.  It was not recorded in the fund financials because under modified accrual, you expense the asset entirely instead of capitalizing it, so you have no depreciation (plus you don’t have an asset to begin with, so you also don’t record a contra-asset)

-12,000,000 à the gov’t funds would have called these OFS from debt proceeds, not recorded them as liabilities, so we need to include them as liabilities by subtracting them from fund balance

+2,000,000 à it straight up tells you the difference – modified A/R = 4,000,000, accrual A/R = 6,000,0000, so you need to add 2,000,000 to get to accrual A/R.

+10,000,000 à Add internal service fund net assets because they were not included as gov’t funds (they are proprietary), yet they are included the in the governmental activities section of the gov’t-wide financials.

-9,000,000 à it tells you this is an extra liability that needs to be recorded

-600,000 à same as above

 

Add them all up = 72,600,000

 

***I’m a bit confused about the 1,800,000.  The calculations work out if you just don’t do anything with it, but perhaps divya or someone will respond with a reason why…sorry I can’t provide an explanation here.

 

Btw, these are great practice problems for understanding this material…where did you get them?  Don’t worry too much if you still have trouble; I doubt you will ever see a MC this long on the actual exam…perhaps a simulation this lengthy, but not a MC.  (Becker has a practice simulation similar to this and it makes it much easier to get partial credit because it’s step by step).  Good luck!



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CPATx
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Posted: 21 May 2009 at 12:17 | IP Logged  

I think that makes a lot more sense than memorizing the formula...

i will try practicing other questions this way and see if that work for me...These questions are from Becker Final review..

Thanks!

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